Comment Re:This must be confusing to y'all (Score 1) 66
Except the stock has movement, and there is some probability that it will move up or down. Savvy investors have more information: they know general trends in stock movement, and can predict more accurately which way it will move. Non-savvy investors don't: they work on the principles of stability, that being that a nice, safe stock that's been climbing will continue climbing, and so they buy in as the stock gains value.
The second group tends to believe the stock is undervalued more when its spot price has climbed longer. They think it will go up forever. The first group has target prices and technical analysis, and starts to sell out at a certain point; this creates a visible stock movement that tips off more risk-tolerant investors who also do technical analysis, who sell out later. Eventually, the small-time traders who want to buy have "enough", or are out of money; the big-time traders who think the stock is overvalued aren't buying; liquidity decreases; and sale price becomes lower.
This difference in evaluation means different groups of people will think the stock is overvalued or undervalued. Even though their methods are different and their valuation of the stock is different, they're both purchasing "stock should increase in price from here". My point was that they're not investing in companies.